EUR/USD turns negative below 1.1800 post-ECB

ECB left its key rates unchanged, matching the broad consensus.
The pair drops below the 1.1800 milestone despite QE announcement.
Attention shifted to Draghi’s press conference and the QE taper.

Pablo Piovano FXStreet

The European currency loses traction today after the European Central Bank left its monetary policy unchanged at today’s meeting, with EUR/USD around the 1.1770 area for the time being.

EUR/USD focused now on Draghi’s presser

Spot lost the grip after the ECB’s Governing Council left its monetary status quo unchanged at today’s meeting, as widely anticipated.

Further out, the ECB left unchanged the interest rate on the main refinancing operations, the interest rate on the marginal lending facility and the deposit facility at 0.00%, 0.25% and 0 -0.40%, respectively.

Additionally, the Governing Council said QE will run at €15 billion/month until end of December 2018, when it is intended to finish.

In the meantime, nervousness keeps running high in light of the upcoming press conference by President Draghi, where further details on the recent announcement of the QE programme should be in centre stage as well as the update on economic growth and inflation in the region.

EUR/USD levels to watch

At the moment, the pair is down 0.13% at 1.1776 and a breakout of 1.1850 (high Jun.14) would target 1.1854 (38.2% Fibo of 1.2413-1.1508) en route to 1.1998 (high May 14). On the downside, the initial support aligns at 1.1756 (10-day sma) seconded by 1.1728 (21-day sma) and finally 1.1617 (low Jun.1).

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

AUD/USD flirts with 0.7000, lowest since early August amid bullish USD

AUD/USD hits a fresh low since early August during the Asian session on Friday and looks vulnerable near 0.7000 after breaking below the 200-day SMA overnight. Against the backdrop of the hawkish Fed, a two-day rally in oil prices revives inflation fears and continues to push US bond yields to multi-year highs. Adding to this, geopolitical risks lift the US Dollar to a two-month high, overshadowing RBA rate hike bets and weighing on the pair.

USD/JPY pulls back from three-week high after failing near 159.00

USD/JPY edges lower during the Asian session on Friday, stalling its recent strong move to a three-week high of 159.00 as Japanese Yen bears turn cautious amid intervention fears. Meanwhile, the US Dollar retains a strong bullish undertone as the Fed's hawkish outlook and oil-driven inflation fears continue to push US bond yields to multi-year peaks. Furthermore, the BoJ's dovish rate hike last week might cap JPY and support spot prices.

Gold treads water below $4,300

Gold grabs some buying attention and advances marginally at the end of the week, partially retracing the weekly decline, although it is still navigating below the key $4,300 mark per troy ounce. The fresh selling bias on the Greenback and the modest decline in US Treasury yields appear to support the humble advance in the precious metal.

Week ahead: Rate hike bets face a crucial data week

Despite the solid drop from the mid-September high, oil prices remained in the driver’s seat for another week, setting the tone in financial markets. Six months have passed since the late-February start of the US-Iran conflict, and there is still no breakthrough in the stalled talks, despite pressure from regional leaders and the rest of the world.

CFTC Report: Defensive currency positioning takes hold

The week in one sentence: Sterling and Euro shorts deepened in the week to September 22, while Yen longs were cut sharply. Oil positioning improved despite a steep price decline, and Gold exposure remained crowded. The main signal was a more defensive currency positioning backdrop.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.